He said a neighbour reported seeing the driver allegedly drop a small blue bag on the footpath near the car.

When the officer opened the bag, he found a stick of power gel explosive, similar to dynamite, and electrical wiring.

Sgt Bould said about five houses were evacuated and the street cordoned off from Lawrence Street to Prague Avenue.

The driver was taken into custody.

Sgt Bould said police contacted the Melbourne-based bomb squad which gave local officers instructions over the phone on how to handle the bag, including how to separate the components to make it safer.

The device was left by the roadside until it was deemed safe enough to be taken away by WorkSafe at 6.40pm.

The sight of police cars, police tape and a fire truck drew the attention of neighbours and passers-by on the hot afternoon.

“We thought it was a drug raid or something,” one woman said.

“It’s very scary for us.”

An elderly man, sitting nearby with his two dogs, said his walk was cut short by the drama.

“I just hope it’s a fizzer,” he said.

A man living next door to where the car was stopped — and where the explosives lay — casually walked out of his house with his dog under his arm and a camera slung around his neck.

He said he thought he had “better evacuate” after his wife, returning home from a trip out, rang him to say there was an explosive outside their house.

“Usually it’s just houses burning around here,” the man said.

“We’ve never had explosives before.”

His wife was slightly less nonchalant.

“I’m pretty nervous because it’s near our home,” she said as she stood with her husband and the dog on the corner of Wigg Street and Prague Avenue.